PERE Dubai: Jumeirah Central is institutional litmus test

The success of a $20 billion master-planned project by local property company Dubai Holding holds the key to institutional investment in the emirate, delegates at PERE’s second annual Growth Forum heard. 

Hopes for meaningful institutional investment in Dubai are being pegged to the success of a large mixed-use development scheme in the emirate, a panel dedicated to the subject told PERE’s audience at the Growth Forum: Middle East & Africa.

Panelists told the 200-delegate event how Jumeirah Central, a 47-million-square-foot development scheme with an approximate end value of about $20 billion, was a key indicator of future institutional engagement with the emirate’s property market.

The scheme, being developed by investment firm Dubai Holding, is expected to take a number of years to build out, with the first phase breaking ground early next year. The phase will include 17 million square feet of gross lettable area, including 3,000 apartments over 13 individual projects as well as 12 office schemes.

Ultimately, Jumeirah Central will comprise 278 individual buildings, including one million square feet of retail, eight million square feet of office space, 7,000 hotel rooms and 40 entertainment venues.

Large, master-planned developments have been a hallmark of Dubai’s property market in the past, but have produced mixed results, as certain schemes failed to gain investor traction or even reach completion after the emirate’s economic issues following the global financial crisis in 2008. However, the panelists agreed this scheme should offer a more attractive opportunity for offshore, institutional capital.

The main reason for that was the intended ownership makeup of its buildings. The panel session was held on a ‘Chatham House’ basis, so panelists could not be identified. But one of the panelists underlined how important it was that strata ownership – ownership by individual floor – would be prohibited at the scheme. Such multiple-ownerships, which are commonplace in Dubai, have prevented institutional investors from investing in the past, as the ability for them to control the fate of these assets was challenging. Meanwhile, institutional-grade assets with single ownership typically were held by state entities or private investors and rarely traded.

“But this will be an example of institutional assets being sold on an individual basis. Jumeirah Central is a great example of the availability of this product coming,” the panelist said. “The development of non-strata developments is exactly what is needed.”

Another panelist agreed that Jumeirah Central was “a great project” but also noted: “We have not seen many institutional joint ventures yet as getting people aligned has been difficult.” One example of a successful collaboration is a joint venture between Investment Corporation of Dubai, a state investment entity and Brookfield Asset Management, the global investment firm. The pair are developing ICD Brookfield Place, a $1 billion scheme at Dubai’s International Finance Center district. “That one has worked,” he said.